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Library/Papers/Trading Green Bonds Using Distributed Ledger Technology

Research paper

Trading Green Bonds Using Distributed Ledger Technology

The paper elicits and evaluates the functional artefact requirements of a novel DLT-based trading and settlement system for green bonds, distinguishing core technical requirements from contextual requirements and objectives for regulated, tradeable carbon-credit securities.

Paper
OverviewDSR gridPaper design mapDesign knowledgePublication metadata

01

Overview

Publication metadata and narrative from the current library record.

Authors
Henrik Axelsen, Ulrik Rasmussen, Johannes Rude Jensen, Omri Ross, Fritz Henglein
Year
2023
Venue
ECIS 2023 Research Papers
Methodology
Design science research; multi-cycle stakeholder engagement (industrial and governmental); technical evaluation against settlement-system requirements.
Publication
View publication
Design knowledge
View design knowledge on GitHub
blockchaindesign-science-researchdltfinance-bondsgreen-bondssecurities-settlementtrading-green-bonds-dlt

Summary

The paper elicits and evaluates the functional artefact requirements of a novel DLT-based trading and settlement system for green bonds, distinguishing core technical requirements from contextual requirements and objectives for regulated, tradeable carbon-credit securities.

Artifact

A DLT-based trading and settlement system (DLT TSS) for green bonds / voluntary carbon credits (Smart Financial Instrument platform).

Methodology

Design science research; multi-cycle stakeholder engagement (industrial and governmental); technical evaluation against settlement-system requirements.

02

DSR grid

Six dimensions represented in the current paper record.

01

Problem description

Trading and settling green bonds (voluntary carbon credits) on distributed ledgers requires satisfying the technical and regulatory requirements of securities settlement systems.

02

Input knowledge

Capital-market-infrastructure and securities-settlement requirements (e.g., T2S); DLT pilot-regime regulation; the Smart Financial Instrument (SFI) platform.

03

Research process

Design science research with multi-cycle stakeholder engagement (industrial and governmental) and a technical evaluation against settlement-system requirements.

04

Key concepts

DLT pilot regime, trading, settlement, liquidity, green bonds, net-zero, funding.

05

Solution description

A DLT-based trading and settlement system (SFI platform) for regulated, tradeable carbon-credit securities. Solution-space representation: Instantiation (artefact) driven by functional artefact requirements (model).

06

Output knowledge

A set of functional artefact requirements (five core technical and nine contextual requirements and objectives).

03

Paper design map

The default semantic design map canonicalizes stored design relationships; Raw links retains the complete technical Markdown-link view.

Design-knowledge map

14 stored concepts / 0 canonical semantic relationships

Concept types
Design Requirements
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04

Design knowledge

Directly linked concepts, grouped by their represented design-knowledge category.

14 Design Requirements

design-knowledge/trading-green-bonds-dlt-req1

REQ1 - Manage states of contracts

Manage states of contracts across the securities' lifecycle.

design-requirementdltfinance-bondsgreen-bonds+2
design-knowledge/trading-green-bonds-dlt-req2

REQ2 - Identify and verify users

Identify and verify that users are authorized for their roles.

design-requirementdltfinance-bondsgreen-bonds+2
design-knowledge/trading-green-bonds-dlt-req3

REQ3 - Maintain ownership

Maintain ownership of securities.

design-requirementdltfinance-bondsgreen-bonds+2
design-knowledge/trading-green-bonds-dlt-req4

REQ4 - Guarantee ACID transaction execution

Guarantee atomic, consistent, isolated, and durable (ACID) execution of compound transactions, specifically delivery versus payment.

design-requirementdltfinance-bondsgreen-bonds+2
design-knowledge/trading-green-bonds-dlt-req5

REQ5 - Enforce correct attribution and non-repudiability

Enforce correct attribution and non-repudiability of actions (using digital signatures and cryptographic commitments).

design-requirementdltfinance-bondsgreen-bonds+2
design-knowledge/trading-green-bonds-dlt-req6

REQ6 - Interoperability with external systems

Interoperability with external systems.

design-requirementdltfinance-bondsgreen-bonds+2
design-knowledge/trading-green-bonds-dlt-req7

REQ7 - Settlement finality

Settlement finality: the determination of a definite time after which the transfer of legal title (ownership) is irrevocable.

design-requirementdltfinance-bondsgreen-bonds+2
design-knowledge/trading-green-bonds-dlt-req8

REQ8 - Support high-frequency-data instruments

Support for new financial instruments with high-frequency data dependencies (e.g., carbon emission monitoring data).

design-requirementdltfinance-bondsgreen-bonds+2
design-knowledge/trading-green-bonds-dlt-req9

REQ9 - DLTR compliance with reasoned exemptions

DLTR compliance with well-reasoned exemptions from existing regulations written for traditional centralized systems.

design-requirementdltfinance-bondsgreen-bonds+2
design-knowledge/trading-green-bonds-dlt-req10

REQ10 - Interoperability with legacy and DLT settlement systems

Interoperability with legacy private and central banking as well as private, permissioned, and permissionless DLT/blockchain and other clearing and settlement systems.

design-requirementdltfinance-bondsgreen-bonds+2
design-knowledge/trading-green-bonds-dlt-req11

REQ11 - Full regulator access for automated supervision

Support for full access by the financial supervisor/regulator to maximize automated supervision.

design-requirementdltfinance-bondsgreen-bonds+2
design-knowledge/trading-green-bonds-dlt-req12

REQ12 - Full transparency and traceability of verification data

Full transparency and traceability of underlying verification data throughout carbon credit and advanced instruments' lifecycle.

design-requirementdltfinance-bondsgreen-bonds+2
design-knowledge/trading-green-bonds-dlt-req13

REQ13 - Efficient high-volume trading with real-time monitoring

Efficient high-volume trading processing, instantaneous settlement (execution) of trades, real-time monitoring, and advanced market abuse detection.

design-requirementdltfinance-bondsgreen-bonds+2
design-knowledge/trading-green-bonds-dlt-req14

REQ14 - Catalyze structured finance via a domain-specific language

Ability to catalyze structured finance by domain-specific language for specifying new instruments and immediately issuing them.

design-requirementdltfinance-bondsgreen-bonds+2

05

Publication metadata

Additional metadata represented in the current library record.

Show additional metadata+
{
  "type": "paper",
  "title": "Trading Green Bonds Using Distributed Ledger Technology",
  "description": "The paper elicits and evaluates the functional artefact requirements of a novel DLT-based trading and settlement system for green bonds, distinguishing core technical requirements from contextual requirements and objectives for regulated, tradeable carbon-credit securities.",
  "resource": "https://aisel.aisnet.org/ecis2023_rp/340",
  "authors": "Henrik Axelsen, Ulrik Rasmussen, Johannes Rude Jensen, Omri Ross, Fritz Henglein",
  "year": 2023,
  "venue": "ECIS 2023 Research Papers",
  "methodology": "Design science research; multi-cycle stakeholder engagement (industrial and governmental); technical evaluation against settlement-system requirements.",
  "dsr_grid": true,
  "dsr_solution_space": "Instantiation (artefact) driven by functional artefact requirements (model).",
  "tags": [
    "trading-green-bonds-dlt",
    "finance-bonds",
    "green-bonds",
    "dlt",
    "securities-settlement",
    "design-science-research",
    "blockchain"
  ]
}